Kraft deal for Cadbury: Gordon Brown warns US firm over jobs

Gordon Brown has warned Kraft not to cut jobs at Cadbury after the US food
giant's £11.5 billion bid for the British confectioner was finally accepted.

The deal ends more than more than 150 years of independence for the maker of Dairy Milk, which will now be subsumed within the world's second-biggest food company.

Kraft Foods, which also makes Toblerone, will take over Cadbury with an offer worth 840 pence a share.

Cadbury's board is now unanimously recommending its shareholders back the bid, after dismissing the initial approach from Kraft as "derisory".

Roger Carr, chairman of Cadbury, said: "We believe the offer represents good value for Cadbury shareholders and are pleased with the commitment that Kraft Foods has made to our heritage, values and people throughout the world.

"We will now work with the Kraft Foods' management to ensure the continued success and growth of the business for the benefit of our customers, consumers and employees."

Mr Brown this morning said that his Government would act to ensure Cadbury's 6,000 UK employees were not sacrificed as Kraft seeks a return on its investment.

He said: "We are determined that the levels of investment that take place in Cadbury in the United Kingdom are maintained and we are determined that, at a time when people are worried about their jobs, that jobs in Cadbury can be secure."

It is unclear what practical measures the Prime Minister could take to protect jobs, although unions have urged him to resist any attempts by Kraft to asset strip the UK business.

The deal is the culmination of a 5-month long chase by Kraft's chief executive, Irene Rosenfeld, for the maker of Creme Eggs and Crunchie chocolate bars.

The colourful takeover battle has seen hedge funds snap up Cadbury shares, Warren Buffett, Kraft's biggest shareholder, warn Kraft not to overpay and Lord Mandelson, the Business Secretary, weigh in.

Ms Rosenfeld, the chief executive of Kraft, said that Cadbury will "thrive as part of Kraft Foods."

The transatlantic deal could still be gatecrashed by US rival Hershey, though analysts are doubtful it has the firepower. The deal also represents a windfall for banking advisers to Cadbury and Kraft who could scoop nearly £150m.

The takeover has raised fears of widespread job cuts at Cadbury, which employs 46,500 worldwide. Cadbury UK sites in Bournville, Birmingham and Somerdale, Bristol could be among those locations hit.

Cadbury was founded in Birmingham in 1831 but has grown to become the world's largest confectionery group with revenues of more than £6bn. Cadbury's shares were trading at 568p before Kraft's initial approach was revealed last September.

David Cumming Head of UK Equities at Standard Life Investments said: "We are supportive of the management's decision although the achieved price is slightly light of our stated target."